Advantages of Comparative Advantage Advantages of comparative advantage are extensive and extend fro

Advantages of Comparative Advantage
Advantages of comparative advantage are extensive and extend from the individual producer level to whole economies:-
It increases efficiency. Countries, companies, or individuals can concentrate on goods for which they are most efficient, thus getting the most from their resources. It thus leads to more production overall and a greater wealth base.
Maximization of total output: Specialization maximizes the total output. By concentrating on the production of goods in which a party has a comparative advantage, it can produce more goods than if they had attempted to produce everything by themselves.
Lowered opportunity cost: By specializing and trading, the parties will be able to lower the opportunity cost of producing goods. This results in better resource utilization.
It enables access to more varied goods and, thereby improves consumers' choice and their level of living standards. Growth in and development of economics can also be achieved due to the principle of comparative advantage; because this principle supports countries that promote efficiency and innovations of certain industries for better results in which a nation compares them with the best they have.
• Both countries have the same opportunity costs, but the decision comes down to specialization based on the good they can produce more efficiently relative to the other.
• Country A has a comparative advantage in producing wheat because it has to give up less wine to produce wheat compared to Country B.
• Country B is comparative advantageous in wine production because it has to give up fewer tons of wheat to produce wine compared to Country A.